All Topics / Value Adding / Subdividing house into 2 units

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  • Profile photo of danhobdanhob
    Member
    @danhob
    Join Date: 2005
    Post Count: 11

    I am looking at a property which lends itself to creating 2 units by erecting a party wall , and another entrance door.
    Owner mentioned the plumbing was done to suit this and layout of the house seems to suit this although it only as one kitchen. But has 2 living areas, bathrooms etc.
    I could live in one as PPOR AND LET THE OTHER
    Zoning is high density so units would be permitted.
    Any practical tips would be appreciated ie legal vehicle to buy it in,,
    sewerage lines etc, tax implications ie calculating cost base of one unit and then the improvements to subdivide it. I dont wish to strata title if i dont have to.

    Profile photo of L.A AussieL.A Aussie
    Member
    @l.a-aussie
    Join Date: 2006
    Post Count: 1,488

    It may be adviseable to start with a trip to the local council and ask the pertinent questions regarding zoning etc, then talk to your accountant and then talk to a couple of builders about costs.

    You only need to strata title if you intend to sell, and even then you don’t need to, but it is a good way to add more value to the property for resale.

    If you live in it and rent out the other unit, I am fairly sure it would be treated as a standard I.P arrangement whereby the costs and depreciation are all tax deductable against your personl income tax. The accountant will help you on this.

    It all sounds very do-able; the hidden costs may be in the costruction, plumbing and fit-out etc. You may need to provide separate driveways, carports etc.

    The other consideration is how much rent will you get on the other unit? A few phone calls to the local agents will give you a ballpark figure.

    Cheers,
    Marc.
    [email protected]

    “we get sent lemons; it’s up to us to make lemonade”

    Profile photo of Linda AllenLinda Allen
    Member
    @linda-allen
    Join Date: 2002
    Post Count: 14

    Hi danhob,
    Good advice from LA Aussie, but also check with council whether they will approve the house for a dual occupancy. Certain fire related restrictions may have to apply in relation to the dividing wall and even though the area is zoned for units, they may not deem the house suitable for dual occupancy from a building code point of view.
    Linda

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